- SGX offers stability with strong dividend yields, defensive stocks, and a well-regulated market.
- New government-backed measures, including the S$5 billion EQDP, enhance liquidity and long-term growth potential.
- SGX remains an attractive investment with undervalued stocks, institutional inflows, and resilient economic fundamentals.
Singapore’s stock market is undergoing a revival with government-backed measures to increase liquidity, attract institutional investments, and improve market competitiveness. The Straits Times Index (STI) recently hit an all-time high of 3,921.30, and the Monetary Authority of Singapore (MAS) has introduced a S$5 billion Equity Market Development Programme (EQDP) to drive further growth.
At the same time, market volatility remains high due to geopolitical tensions, fluctuating interest rate expectations, and global economic uncertainties. In this environment, SGX stands out as a defensive market—one that provides stability, strong dividend returns, and resilience against market downturns.
With pro-business policies, new investment incentives, and a well-regulated financial system, Singapore’s stock market remains a solid long-term investment choice.
Why SGX is a Defensive Market in Volatile Times
Stock markets worldwide have faced heightened uncertainty, with geopolitical risks, shifting economic policies, and inflationary pressures causing volatility. However, SGX-listed stocks have historically been more resilient due to the following factors:
1. Strong Presence of Defensive Sectors
- The Singapore market is dominated by financials, real estate, and industrials, which tend to hold up well during economic uncertainty.
- Banks like DBS, UOB, and OCBC are highly capitalized and continue to generate strong profits, even during market downturns.
- Real estate investment trusts (REITs), a major part of SGX, offer stable dividend yields, making them attractive during periods of economic instability.
2. Stable Dividend Payouts
- Many SGX-listed companies have a strong track record of dividend payments, providing investors with consistent returns.
- Dividend stocks serve as a buffer against volatility, offering income while waiting for capital appreciation.
3. SGX’s Regulatory Strength and Market Transparency
- Singapore’s stock exchange is one of the most well-regulated and transparent markets in Asia, offering a high level of investor protection.
- The disclosure-based regime ensures companies provide detailed financial information, helping investors make informed decisions.
4. Singapore’s AAA Credit Rating and Safe-Haven Status
- Singapore is one of the few countries in the world with an AAA credit rating, reflecting strong economic fundamentals and fiscal discipline.
- This makes SGX a preferred choice for investors seeking capital preservation in times of uncertainty.
New Government Measures: Strengthening SGX for Long-Term Growth
While SGX has historically been a defensive market, the Singapore government is now introducing new measures to enhance its competitiveness and ensure long-term capital appreciation opportunities for investors.
1. S$5 Billion Equity Market Development Programme (EQDP)
- MAS will partner with fund managers to invest in Singapore-listed stocks, ensuring long-term institutional interest in SGX equities.
- This move is expected to increase liquidity and attract capital from global investors.
2. Tax Exemptions to Support Fund Managers
- Fund managers investing in Singapore equities will benefit from tax incentives, encouraging the launch and distribution of SGX-focused funds.
- This will bring more active investment into the local stock market, creating a more dynamic and liquid environment.
3. Adjustments to the Global Investor Programme (GIP)
- High-net-worth individuals (HNWIs) and family offices looking to invest in Singapore will now have to allocate at least S$50 million to SGX-listed stocks.
- This ensures a steady flow of long-term capital into the market.
4. Streamlined Listing Processes to Attract More Companies
- Regulations will be adjusted to make it easier and faster for companies to list on SGX.
- This will increase the number of quality IPOs, providing investors with more growth opportunities.
Why Now Is the Right Time to Invest in SGX for the Long Term?
1. SGX Offers Stability and Growth Potential
- With defensive stocks, strong dividends, and government-backed growth measures, SGX provides a balanced mix of stability and long-term upside.
- The Straits Times Index (STI) remains undervalued with a Price-to-Book (P/B) ratio of just 1.3x, making it an attractive entry point for long-term investors.
2. Dividend Income in a Volatile Market
- Investors looking for passive income should focus on SGX-listed dividend stocks, including DBS, UOB, OCBC, Singtel, and blue-chip REITs.
- With potential interest rate cuts in 2025, REITs could see higher capital appreciation alongside steady yields.
3. Institutional and Foreign Capital is Flowing Into SGX
- The S$5 billion EQDP, combined with new investor-friendly tax policies, ensures that more institutional capital will enter the Singapore market.
- The expansion of the Global Investor Programme (GIP) will further boost SGX’s attractiveness to long-term investors.
Conclusion: SGX is a Smart Long-Term Investment
Singapore’s stock market has long been a safe and stable investment choice, but with the new government initiatives, SGX is now positioned for long-term growth as well. The combination of:
- Defensive stocks that provide stability in volatile markets.
- Strong dividend yields to cushion downturns.
- New liquidity measures to attract institutional and global investors.
- Increased IPO activity and market depth.
…makes SGX one of the best investment options in Asia today.
Investors should consider adding SGX stocks to their portfolios, focusing on high-quality financials, industrials, and dividend-paying stocks, while taking advantage of long-term capital growth opportunities.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
